Right to manage – Notice – Validity – Appellant serving notice on respondent freeholder of intention to acquire right to manage building – First-tier tribunal deciding notice invalid – Appellant appealing – Whether appellant wrongly failing to serve notice on lessee of part of roof – Whether appellant complying with statutory procedure under section 79(6) of Commonhold and Leasehold Reform Act 2002 – Appeal allowed
The appellant served notice on the respondent freeholder of its intention to acquire the right to manage Lexham House, 45-53 Lexham Gardens, London W8, a block of 24 flats, pursuant to section 79 of the Commonhold and Leasehold Reform Act 2002. The lessees of the top floor flats were granted the exclusive right to use the roof space above their flats. It was not in dispute that that amounted to an easement to make use of the roof space, and not a demise of the roof.
The respondent served a counter-notice and the First-tier Tribunal (FTT) decided that the appellant was not entitled to acquire the right to manage the property because it had not served the claim notice on a third party (EID) which held a lease of part of the roof of the property under a 999 year lease. The FTT held that EID was a landlord of part of the premises and therefore the appellant had not complied with the requirements of section 79(6) of the 2002 Act, which provided that the claim notice had to be given to each person who, on the relevant date, was the landlord under a lease of the whole or any part of the premises, party to such a lease otherwise than as landlord or tenant, or a manager appointed under Part 2 of the Landlord and Tenant Act 1987 to act in relation to the premises, or any premises containing or contained in the premises.
The appellant appealed. The issue was whether the requirements of section 79(6) of the 2002 Act had been complied with. The appellant argued that the FTT was in error because EID was not a landlord of the roof surface and structure of the property; and, even if it was, failure to serve in those circumstances did not invalidate the procedure. The appeal was decided on the basis of written representations.
Held: The appeal was allowed.
(1) Section 79(6) of the 2002 Act required service of the claim notice on each landlord under a lease of the whole or any part of the premises. The “premises” in this case was the property. EID was a landlord in respect of the top floor flats on the basis that it held the reversion to the easements appurtenant to the three top floor flats and, as lessee of the roof, it was liable to the tenants of all the flats to perform the landlord’s covenant to repair the roof. The fact that EID held the reversion to the easement granted for a term to each of the top floor lessees made it a landlord within the meaning of section 79(6): Nevill Long & Co (Boards) Ltd v Firmenich & Co [1983] 2 EGLR 76 considered.
(2) In Elim Court RTM Co Ltd v Avon Freeholds Ltd [2017] EWCA Civ 89; [2017] PLSCS 46, the Court of Appeal had to consider the consequences of the failure to serve the claim notice on the intermediate landlord of a single flat in a block of 40 flats. The Court of Appeal pointed out that the right to manage scheme established by the 2002 Act enabled private persons to acquire property or similar rights. In assessing whether the requirements of the statutory scheme had been complied with, substantial compliance would not do. The court had to consider the intention of the legislature in prescribing a particular procedure, in the light of the statutory scheme as a whole. Where critical information was missing from a notice, it would generally be invalid; where what was missing was of secondary importance then it might be valid. Considering the purpose of service, the court concluded that the failure to serve an intermediate landlord with no management responsibilities did not invalidate the notice.
(3) The FTT had taken the view that the interest held by EID was more significant than that held by the intermediate landlord in Elim Court and that therefore failure to serve a claim notice upon it meant that section 79(6) had not been complied with. However, that was to ignore the reality of the situation. EID held a lease of the roof over the surface of which the three top floor flats had an easement. It might or might not have also held the reversion to a thin slice of the premises demised by the leases of those flats. But it had no practical involvement in the property at all; as between EID and the respondent, only the respondent was responsible for the repair of the roof and for compliance with the covenants in the leases of the flats. Had the tenants needed to enforce the landlord’s covenant to repair the structure, they would have been entitled to pursue EID but had they done so it would have been the respondent that would have done what was required. The reality was that at the date of the service of the claim notice and for the foreseeable future the respondent took responsibility for the structure and fulfilled the landlord’s obligations to the tenant in respect of the roof. That would be the case for some decades unless the respondent was able to buy out the easements attached to the top floor flats. In practical terms, and whether or not it in fact held the reversion to a thin slice of the demised premises, EID was not affected at all by the appellant’s assumption of the right to manage. It did not even need to be informed of the appellant’s existence and intentions, because it was in common ownership and control with the respondent and its officers therefore had that information.
(4) This was a case where the intermediate lessee had far less involvement with the property as a whole than had the intermediate landlord/lessee in Elim Court. The FTT had reached an unsustainable conclusion about compliance with section 79(6) because it did not take into account the relevant information about the reality of EID’s responsibilities to the lessees of the flats. Accordingly, the tribunal would substitute its own decision that the appellant had complied with the requirements of section 79(6) of the 2002 Act.
Eileen O’Grady, barrister
